Crooks Are the Problem, Not Freight Pay Industry

Crooks Are the Problem, Not Freight Pay Industry

Copyright 2002, Traffic World Magazine

I have read with interest your coverage of two freight payment companies that have had recent problems. While much of your coverage is excellent, I think an essential point has been missed. Shippers have been hurt by these companies because of management dishonesty - not because shippers negotiated good service deals and not because there is inherent risk in outsourcing this function - and these individuals should be prosecuted accordingly.

Most companies performing freight payment services are honest and work hard to please their customer base. It's a tough job but shippers gain tremendous value when it's done well by the provider. We have been at this for over 15 years and we know our clients appreciate their excellent return on investment. We do not feel our customers grind us down while ignoring bigger opportunities we make possible. Our industry contacts indicate that this is typically the type of relationship shippers maintain with our competition as well. There is loyalty as long as it is earned.

The dishonesty comes into play when customer monies are co-mingled with operating funds. Bankruptcy and business failures happen in every industry. If a company is going out of business, they need to disburse whatever funds have been received to their allocated freight carrier invoices. Failure to do so is simply stealing.

Our recommendation to shippers is to do the following:

-- Make sure your provider has a sufficient fidelity insurance policy in place naming your company as a beneficiary and notifying you of any changes. These policies cover employee and management dishonesty in the handling of your funds.

-- Check the background of the ownership as well as the company itself.

-- Have your monies managed in a separate identifiable bank account and request statement copies on a periodic basis.

-- Don't allow freight payment companies to use your money for float by insisting that disbursements to carriers take place within a week of funds' receipt (two business days is our standard).

-- Have your internal audit department review procedures at the onset of service and at various times during the working relationship. Ours have been successfully reviewed by our Big Five accounting firm clients.

-- Consider setting up an ACH type of account, where you can monitor funding and disbursements.

-- Consider whether your company should write the checks and have them disbursed by the freight payment company. We have a large electronics concern that uses this method and then pays us a nominal handling fee.

Shippers need to consider all the benefits of outsourcing freight payment processing and the tremendous data capture that comes along with the automation of tedious tasks. We don't believe this is a "hurricane" of a problem as long as shippers use sound business intelligence in the hiring and management of the freight payment provider.

Phil Ramsdale


Transport Solutions LLC